Maclab (NZ) Limited v Wilson - [2014] NZHC 1242

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2014-442-000008 [2014] NZHC 1242

BETWEEN
MACLAB (NZ) LIMITED

Plaintiff

AND

PHILLIP JOHN WILSON Defendant

Hearing: 29 May 2014

Appearances:

S Galbreath for Plaintiff
R M Dillon for Defendant

Judgment:

5 June 2014

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] The plaintiff (Maclab) is a mussel farmer and manufacturer of mussel based nutraceutical products. It was incorporated in 1996. Its shareholders commenced the business some 30 years ago and approximately 25 years ago employed the defendant (Mr Wilson) initially on a casual basis but later on a full-time basis, and from around the time Maclab was incorporated, as its manager.

[2] All the shareholders are based in Victoria, Australia. In 2006 they were advised that a New Zealand director was required and appointed Mr Wilson to that position.

[3] After an audit of its accounts in 2013 the other directors of Maclab discussed with Mr Wilson certain issues which had been identified in the audit, and in October
2013 he was removed as a director, and his employment was terminated.

[4] This proceeding was commenced on 21 February 2014. On 25 February

2014, before this proceeding was served on him, Mr Wilson lodged a claim with the

MACLAB (NZ) LTD v P J WILSON [2014] NZHC 1242 [5 June 2014]

Employment Relations Authority (ERA) alleging unjustifiable dismissal from his employment.

[5] On this proceeding Mr Wilson has entered an appearance under protest to jurisdiction. He says the ERA has exclusive jurisdiction to make determinations on the issues raised in this proceeding. Maclab has applied to set aside the appearance. The issue in this case is whether the ERA has exclusive jurisdiction to determine the issues raised in this proceeding.

The statement of claim

[6] In paragraph 11 of the statement of claim Maclab pleads:

In mid-2013 the Broadbents discovered various financial anomalies in the day-to-day management of the plaintiff’s mussel farming operation.

[7] The reference to the Broadbents is to the directors and shareholders of

Maclab.

[8] In paragraphs 12 to 48 inclusive Maclab pleads eight groups of transactions, all said to have been undertaken, arranged or authorised by Mr Wilson, which it calls into question. In general terms it says that Mr Wilson has gained personally from each of the pleaded transactions.

[9] Maclab then pleads three causes of action. In each, the opening pleading is that at all material times Mr Wilson was a director of Maclab. In the first cause of action it is said that Mr Wilson owed Maclab a fiduciary duty to act in its best interests. In the second it is said that Mr Wilson owed Maclab a duty under s 131 of the Companies Act to act in good faith and in Maclab’s best interests. In the third it is said that Mr Wilson owed Maclab a duty under s 133 of the Companies Act 1993 to exercise its powers for a proper purpose. The transactions pleaded earlier in the statement of claim are cited in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Maclab (NZ) Limited v Wilson

Details

AGLC: Maclab (NZ) Limited v Wilson [2014] NZHC 1242
Case: [2014] NZHC 1242
Decision Date: 5 June 2014

CaseChat Overview and Summary

Maclab (NZ) Limited, a mussel farming and manufacturing company, commenced proceedings against Phillip John Wilson, its former director and employee, alleging breaches of fiduciary duty, statutory duties under the Companies Act 1993, and other claims arising from financial anomalies in the day-to-day management of the company. Mr Wilson challenged the jurisdiction of the High Court, arguing that the Employment Relations Authority (ERA) had exclusive jurisdiction over employment-related matters. The primary issue was whether the ERA had exclusive jurisdiction over the claims Maclab raised against Mr Wilson.

Mr Wilson argued that the claims were employment relationship problems within the ERA's exclusive jurisdiction, as he was an employee and director of Maclab during the relevant period. He claimed that the alleged transactions were within the definition of "employment relationship problem" as defined in the Employment Relations Act 2000. He further argued that all the transactions were within the ERA's jurisdiction because they related to or arose out of his employment relationship with Maclab. On the other hand, Maclab contended that the claims arose from Mr Wilson's position as a director, not his employment relationship. They argued that the causes of action were not employment relationship problems and thus fell within the general jurisdiction of the High Court.

The court found that the nature of the duties arising from the facts governed the forum, not the facts in isolation. It distinguished between the factual setting of the cause of action and the basis for the duty being imposed. While the acts occurred during the employment relationship, the duties imposed on Mr Wilson by law arose from the separate offices he held as manager and director. The court emphasised that the duties owed by a manager under an employment contract were separate and distinct from the duties owed by a director. The court rejected the "but for" test and held that the nature of the duties arising from the facts governed the forum, not the facts considered in isolation. The court held that fiduciary duties can arise from various relationships, and the fiduciary duty a director owes to the company does not arise from the employment contract but is separate and distinct. Consequently, the court concluded that the claims were not within the exclusive jurisdiction of the ERA.

The application to set aside the appearance was granted with costs to Maclab on a 2B basis together with disbursements fixed by the Registrar. A statement of defence was to be filed within 15 working days, after which the Registrar was asked to convene a case management conference for further directions.

Orders